Nvidia Surpasses $3 Trillion Valuation, 12x Larger Than an African Economy

During trading hours on June 5, 2024, Nvidia surpassed the $3 trillion valuation mark, becoming the second most valuable public company in the world, ahead of Apple Inc.

Nvidia’s stock rose 5.16% during trading hours, closing at $1,224.40, up from $1,164.37 the previous day. 

This impressive performance places Nvidia just behind Microsoft, which holds a market capitalization of $3.15 trillion.

Nvidia’s Rapid Growth and Market Position

Nvidia’s market capitalization reached $3.01 trillion, a significant milestone, especially when compared to Nigeria’s projected GDP of $253 billion by the end of 2024. 

Nvidia’s value is approximately 12 times larger than Nigeria’s economy, highlighting the company’s dominant market position. 

The company, less known than tech giants like Alphabet (Google), Amazon, Hewlett Packard, Meta, and Tesla, leads in next-generation computing through its AI-powered cloud services, AI microchips, and data centre GPUs.

Historical Achievements

Nvidia was founded in 1993 by Jensen Huang, Chris Malachowsky, and Curtis Priem. They aimed to revolutionize computer graphics and accelerate computing. In 1999, Nvidia launched its first GPU, the GeForce 256, which was a commercial success. 

The company went public that same year, listing on NASDAQ with a share price of $0.44. Nvidia has since grown into the world’s leading GPU producer for data centres and high-end computing devices, with a customer base of over 1,600 generative AI companies.

In May 2023, Nvidia crossed the $1 trillion valuation mark for the first time. By February 2024, it had reached $2 trillion, and on June 5, 2024, it surpassed $3 trillion. 

Nvidia is the top-performing stock on NASDAQ this year, with a year-to-date gain of 147.2%. The company’s share price has increased significantly from $481.68 at the start of 2024 to $1,224.40 in June. 

Nvidia’s stock outperforms the NASDAQ Composite Index, which has posted a year-to-date gain of 16.40%.

Nvidia Strong Financial Results

For the fiscal year ending March 31, 2024, Nvidia reported revenue of $60.9 billion, marking a 126% increase from the previous year. 

Operating income grew by 681% to $33 billion, with an operating margin of 54.2%. 

This performance was driven by a 217% growth in data center revenue, totaling $47.5 billion from the sales of GPUs and InfiniBand.

The booming data center market, driven by the increasing number of internet-connected devices, positions Nvidia for continued growth. 

Nvidia holds a 98% share in the data center GPU market and powers generative AI companies like ChatGPT with its high-power GPUs. 

The company’s AI infrastructure supports major cloud services, such as Google Cloud and Amazon Web Services.

Nvidia CEO’s Vision and Stock Split

CEO Jensen Huang highlighted the shift from traditional to AI-powered data centers. 

“Companies and countries are partnering with Nvidia to shift the trillion-dollar traditional data centers to accelerated computing and build a new type of data center − AI factories − to produce a new commodity: artificial intelligence.”

To make its shares more accessible, Nvidia announced a 10-for-1 stock split. Shareholders will receive nine new shares for every one they hold. 

The stock split, set for June 7, 2024, will commence trading on a split-adjusted basis on June 10. 

This move aims to make stock ownership more accessible to employees and investors, reducing the share price to approximately $122.44 post-split.